Key Momentum Shifts

  • Health Care (XHJ) remains the market's strongest leader, continuing to occupy a dominant position within the Leading quadrant despite moderating momentum.
  • Financials (XFJ) remain firmly in the Leading quadrant, maintaining positive relative strength although momentum continues to soften.
  • Energy (XEJ) remains the strongest improving sector, extending its powerful rotation toward market leadership.
  • Information Technology (XIJ) continues to strengthen within Improving, reinforcing the recovery in growth-oriented sectors.
  • Technology (XTJ) remains in Improving, maintaining constructive momentum and moving closer to the Leading quadrant.
  • Communication Services (XPJ) has entered Lagging, representing the most significant rotational deterioration in the latest RRG.
  • Utilities (XUJ) continue to improve within Lagging, while Materials (XMJ) remain among the market's weakest sectors.

The Relative Rotation Graph (RRG) for 9 July 2026 continues to highlight a constructive shift in ASX sector leadership. While Health Care and Financials remain the dominant market leaders, Energy and Technology-related sectors are strengthening rapidly and appear increasingly capable of challenging the current leadership group. The most notable change in the latest rotation is Communication Services moving into the Lagging quadrant, signalling a deterioration in both relative strength and momentum.

ASX Sector Momentum Summary

ASX Sector Relative Momentum Chart (at the closing price of 09/07/2026). Powered by: amibroker.com

Momentum Breakdown by Quadrant

Leading Quadrant

  • Health Care (XHJ) remains the ASX's strongest sector from a relative-strength perspective. Although the tail has begun turning lower, the sector continues to trade well within the Leading quadrant. This suggests institutional investors continue to favour defensive growth companies with resilient earnings and strong long-term fundamentals.
  • Financials (XFJ) continue to demonstrate leadership characteristics. Relative strength remains firmly positive despite a gradual loss of momentum. Supported by attractive dividend yields, stable earnings expectations, and confidence in Australia's banking sector, Financials remain one of the market's most influential leadership groups.

Improving Quadrant

  • Energy (XEJ) remains the strongest momentum story on the ASX. After emerging from deep Lagging territory, the sector continues to advance further into the Improving quadrant. Its powerful north-east trajectory reflects growing investor confidence in commodity and energy-related opportunities. Energy remains one of the sectors most likely to enter the Leading quadrant in the coming weeks.
  • Information Technology (XIJ) continues its strong recovery within Improving. The sector has exhibited one of the most aggressive positive rotations on the chart, signalling renewed investor appetite for technology and growth-oriented themes. Continued improvement in relative strength could pave the way for a future transition into leadership.
  • Technology (XTJ) remains firmly positioned in Improving. While momentum has moderated slightly, the sector continues to demonstrate constructive rotational behaviour following a prolonged period of underperformance. If the current trend persists, Technology could eventually become a significant source of market leadership.

Weakening Quadrant

  • Consumer Discretionary (XDJ) remains in Weakening but continues to trade near the boundary with Leading. Relative strength remains healthy, and recent momentum improvement suggests the sector could re-enter leadership should buying pressure continue.
  • Consumer Staples (XSJ) remain within Weakening despite signs of stabilisation. Relative strength remains above market averages, although investors appear to be directing capital toward sectors offering stronger momentum profiles.
  • Industrials (XNJ) continue to occupy a neutral position within Weakening. While momentum has improved modestly, stronger relative-strength confirmation will be required before a more constructive outlook can emerge.

Lagging Quadrant

  • Communication Services (XPJ) has entered Lagging, marking the most significant deterioration in the latest RRG. The move suggests both relative strength and momentum have weakened versus the broader market. Unless momentum improves, the sector may continue to underperform in the near term.
  • Utilities (XUJ) remain in Lagging but continue to move steadily toward Improving. Recent rotational behaviour suggests relative underperformance is moderating, and the sector may be approaching a more constructive phase.
  • Real Estate (XJR) remains in Lagging despite some improvement in momentum. Although downside pressure has eased, the sector continues to trail stronger areas of the market.
  • Materials (XMJ) remain among the weakest sectors on the ASX. Both relative strength and momentum continue to lag the broader market, indicating investors remain reluctant to increase exposure despite occasional short-term rebounds.

Strategic Summary

The latest RRG continues to confirm that Health Care (XHJ) and Financials (XFJ) remain the ASX's dominant leadership sectors, providing the strongest combination of relative strength and momentum.

However, the most important development remains the continued strengthening of the Improving quadrant. Energy (XEJ), Information Technology (XIJ), and Technology (XTJ) are displaying the strongest positive rotational characteristics and appear well-positioned to challenge the current leaders over the coming weeks.

Meanwhile, Communication Services (XPJ) has deteriorated into Lagging, joining Materials (XMJ), Real Estate (XJR), and Utilities (XUJ) among the market's weaker sectors. Overall, the sector rotation picture remains constructive, with leadership broadening beyond the traditional defensive sectors as Energy and Technology continue to gain momentum.